A number of financial mechanisms exist for paying interest to the purchaser of an obligation (including, but not limited to, a bond (such as a convertible bond, for example), a bond plus a warrant unit structure to buy stock, or a money market fund). For example, bonds and money market funds which pay fixed or variable rate interest may be purchased by the public from many sources. One conventional type of bond is a fixed income bond having an interest rate which is reset so that the bond pays on par (wherein the resetting of the interest rate is triggered by the value of the bond).
Likewise, a number of financial mechanisms exist which permit a holder to purchase stock at a future date. For example, “options contracts”, which are typically sold to the public, give the holder of the contract the right to purchase a given stock at a fixed price at a future date. Similarly, “warrants”, which are typically given or sold to employees of a company, give the holder the right to purchase stock in the employee's company at a fixed price at a future date.
Nevertheless, none of the existing financial mechanisms provide for an interest-bearing obligation in which the interest payable on the obligation is reset when the price of an underlying or tracked stock changes, as provided for by the present invention.